GEORGE TOWN – The ringgit’s worrying decline against major currencies in recent months has not caused inflation to rise in the country, said Rafizi Ramli.
This is one of the reasons financial authorities did not intervene aggressively to prop up the ringgit in the global currency markets, according to the economy minister.
Data brought to the ministry revealed that although there was a spike in living costs, it was not predominantly attributed to a weaker ringgit, Rafizi said.
“In recent weeks, it (data) also showed that the national inflation rate had moderated and gradually been brought under control.”
Speaking at the mid-term review of the 12th Malaysia Plan at the Olive Tree Hotel here, the Pandan MP said that the ringgit’s value is closely intertwined with the US dollar and the decisions made by the US Federal Reserve on their interest rate levels.
Among others present at the review were caretaker chief minister Chow Kon Yeow and fellow state executive councillors.
Rafizi urged critics of the country’s monetary policy to not be simplistic in their outlook.
“It is a complex and complicated situation when it comes to our ringgit.
“At times, the value of the ringgit is not related to the country’s economic performance at all.
“It is due to external factors, including currency traders, who transact it daily with some of them resorting to short selling to earn quick profits.”
Rafizi also urged critics to bear in mind that the currency’s value is also dependent on international fund managers, who must determine where globally they chose to invest (park) their funds to determine the best return of investments for their investors.
The country has since decided to address the value of the ringgit in the mid- to long-term, preferring to pay more attention towards addressing the “structural” economic issues besieging the nation.
“In time, there would be a self-correction of the ringgit in the markets. We believe the ringgit would also strengthen once the country addresses issues such as debt and corruption.”
Among the areas to tap into is to shift more into tech-based industries, which generate better returns rather than the conventional financial services such as banks and consumerism.
Tech is not just limited to the purview of the electrical and electronics segment, of which Penang is an important global supplier, Rafizi said, pointing to alternatives energy sources, green tech and the internet of things. – The Vibes, July 22, 2023
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